Presenation by Sara Imhof, Midwest Regional Director, as presented at "Rising Debt: Sinking our Future" Conference at SIUC, October 18, 2010

1. presented by Sara Imhof, Midwest Regional Director THE CONCORD COALITION www.concordcoalition.org Rising Debt: Sinking our Future?

3. Current Fiscal Policy $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 In billions of 1996 constant (chain) dollars 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 Fiscal Years

4. Gross National Debt 1980-2010 Source: Office of Management and Budget 2010.

5. Debt Held by the Public as a Percent of GDP 1940-2010 Source: OMB Historical Tables 2009. As a Percentage of GDP

6. Debt Held by the Public as a Percent of GDP 1940-2040 Source: GAO Analysis, 2010 and OMB Historical Tables 2010. As a Percentage of GDP Actual Projected World War II 108.6% 2010 63.6%

7. National Saving Is Very Low by Historical Standards Source: BEA, NIPA Tables 1.1.5 and 5.1 (2010).

8. Composition of Projected FY 2010 Federal Government Revenues and Outlays (Deficit: $1.34 Trillion) Estate & Gift Taxes ($21 billion) Other Taxes Corporate Taxes Social Insurance Taxes Individual Income Taxes Outlays: $3.49 trillion Revenue: $2.14 trillion *Includes all appropriated domestic spending such as education, transportation, homeland security, housing assistance, and foreign aid. Source: CBO August 2010. Interest Domestic* Social Security Medicare & Medicaid Other Entitlements Defense

9. Federal Spending vs. Revenues as a Percent of GDP (FY 1980-2020) CBO August Baseline Compared to the President’s Budget  CBO August 2010 Baseline  CBO’s Estimate of the President’s Budget Source: Congressional Budget Office, August 2010.. Average outlays: 21.0% Average revenues: 18.3% Percentage of GDP Actual Projected

10. Percent of Debt Held by the Public Owned by Foreigners (1987-2010) Source: United States Treasury Department, Treasury Bulletin, September 2010. Percentage of Ownership of Publicly-Held Debt

11. Interest Costs Go Through The Roof Source: Congressional Budget Office August 2010 and CBO’s Analysis of the President’s Budget, March 2010. Billions of Dollars

12. Without reforms, by 2022, future revenues will only cover Social Security, Medicare, Medicaid, and interest on the debt. By 2046, revenues won’t even cover interest costs. 5

13. Social Security, Medicare, & Medicaid as a Percentage of the Federal Budget All other Federal Spending $2.07 Trillion 59% Social Security, Medicare and Medicaid $1.42 Trillion 41% Source: Congressional Budget Office, August 2010.

14. Mandatory spending is consuming a growing share of the budget 62% 31% 7% 40% 15% 45% 39% 6% 55% Source: Congressional Budget Office, January 2010. 1970 1990 2010 Mandatory Discretionary Net Interest

15. Outlays of Select Mandatory Spending Programs (FY 2010 Projected) Source: Congressional Budget Office, January 2010.

16. Change in Composition of Discretionary Spending 68% 32% 60% 40% 50% 50% Defense Non-defense Source: Congressional Budget Office, January 2010.

17. Defense Discretionary Spending as a Percentage of GDP Source: Congressional Budget Office, August 2010. As a Percentage of GDP

18. Projected Growth in Entitlement Spending far Greater than Defense Spending Source: Government Accountability Office and Congressional Budget Office. 2010.

19. Non-Defense Discretionary Spending as a Percentage of GDP Source: Congressional Budget Office, January 2010. As a Percentage of GDP

20. Outlays of Select Non-Defense Discretionary Programs (FY 2010 Projected) Source: Congressional Budget Office, January 2010. *includes ground, air, and water Education Transportation Housing, Natural Veterans Foreign Aid General Science, Energy & Resources Government Space & Nutrition Asst. Technology

21. Automatic Growth Rate in the Big Three Entitlements Swamps Growth of Appropriations Projected Annual Growth Rate in Social Security, Medicare and Medicaid Annual Growth Rate in Social Security, Medicare and Medicaid outlays Plausible Annual Growth Rate in Discretionary Spending Source: Congressional Budget Office, January 2010.

22. Americans Want to Cut Spending – But Not on the Programs That Cost the Most Source: The Economist/YouGov Poll, April 2010 and Congressional Budget Office, January 2010.

23. America’s Population is Aging Population age 65 and Over Source: Social Security and Medicare Trustees’ Report, 2010. Year Percentage of Population Aged 65 and Over

25. Since its inception, the Social Security program has experienced more surpluses than deficits 7

26. In the future, persistent cash deficits are projected for Social Security In 2015, OASDI will begin operating with a permanent cash flow deficit. 8

27. Health Care Costs are Rising Faster Than the Economy Source: Congressional Budget Office, June 2009. Percentage of GDP Historic Level of Federal Revenues Historic Level of Federal Spending Assumes that health care cost growth will not exceed GDP growth. Assumes that health care cost growth continues at the average rate for the past 40 years (2.5 percentage points greater than GDP growth.) Assumes that health care cost growth rate declines to 1.0 percentage point greater than GDP growth—consistent with the assumption used by the Medicare Trustees.

28. Medicare’s Fiscal Future Relates to ALL of us

29. U.S. spends much more, doesn’t get more Source: UC Atlas of Global Inequality

30. Medicare Costs Soar in the Coming Decades Calendar Year As a Percentage of GDP General Revenues required to fund the program Income from dedicated taxes, premiums, and state transfers Source: Medicare Trustees’ Report, May 2009.

31. Health Expenditures as a Percent of GDP (1960-2019) *Projected Source: Centers for Medicare and Medicaid Services, September 2010.

32. How Paying for Health Care Has Changed (1960-2008) Source: Centers for Medicare and Medicaid Services.

33. Almost three out of every ten Medicare dollars is spent for people who are in the last year of life SOURCE: Data from the Center for Medicare & Medicaid Services, Office of the Actuary Last Year of Life Study . Compiled by PGPF. NOTE: Data estimated for 2009, the most recent available. *Decedents. **Survivors. 17

34. Current fiscal policy is on an unsustainable path Federal Outlays as a Percentage of GDP Social Security Medicaid Medicare All Other Interest Source: Government Accountability Office, 2010. Average tax revenue

41. Federal Revenue and Spending (FY2009) Revenues $ Bil % Spending $ Bil % Individual Income Taxes Health Care Payroll Taxes (SI, Medicare, & FICA) Social Security Other Taxes National Defense Corporate Income Taxes Income Security Total Revenue Other Interest Education Environmental International Affairs Total Outlays

42. Federal Revenue and Spending (FY2009) Revenues $ Bil % Spending $ Bil % Individual Income Taxes 915 26 Health Care 764 22 Payroll Taxes (SI, Medicare, & FICA) 891 25 Social Security 683 19 Other Taxes 161 5 National Defense 663 19 Corporate Income Taxes 138 4 Income Security 534 15 Total Revenue 2105 60 Other 526 15 DEFICIT 1417 40 Interest 191 6 Education 78 2 Environmental 46 1 International Affairs 37 1 Total Outlays 3522 100

43. Current Policy Trends Lead to Large Sustained Deficits Fiscal Years 2011-2020 CBO August 2010 Baseline The Concord Coalition Plausible Baseline assumes that discretionary spending grows at the rate of nominal GDP, that war costs slow gradually, that Medicare physician payment cuts are postponed, and that all expiring tax provisions (including those from the 2009 stimulus package) are extended with AMT relief. Source: Congressional Budget Office, August 2010 and Concord Coalition analysis. Billions of Dollars -$15.2 Trillion Deficit -$6.2 Trillion Deficit